Yes Bank has seen a 30.2% increase in its net profit for the March quarter, due to strong growth in advances and growth in low-cost CASA deposits.

Yes Bank has seen a 30.2% increase in its net profit for the March quarter, due to strong growth in advances and growth in low-cost CASA deposits. Rana Kapoor, MD and CEO, said the bank’s CASA ratio will touch 40% in the next 4 quarters or sooner. He also spoke on the one-time increase in NPA this quarter. Edited excerpts:

What were the reasons behind strong growth in net profit, total income and net interest income?

These were on the back of strong growth in advances and steady appreciation of CASA, resulting in expansion of NIM. NIM expanded to 3.6% for the first time in our lifecycle in the fourth quarter, compared to 3.5% in the sequentially preceeding quarter. In the entire last year, it stood at 3.4%. The CASA ratio stands at 36.3% levels. We are well ahead of our target for 2020, which was at 40%. I am quite hopeful we will get to 40% in the next four quarters.

What is your exposure to sectors that are considered sensitive? When you look at the composition of our total advances of Rs 1.3 lakh crore, which has roughly grown by 34.7%, the corporate banking book that is spread over 8 distinct corporate businesses constitutes 67.7% of total advances. Retail business driven by the branches constitute about 32.3%.

On the overall sectoral distribution, bulk of our business is in sunrise sectors and very little is exposed to some of the more mature sectors. Looking at the sensitive sectors, iron & steel is only 1.8% of our total exposure, out of which 1.3% is rated ‘A’ or better. EPC constitutes 7.3% of our overall advances, of which 4.4% is rated ‘A’ or better. Electricity is showing tremendous improvement — here we have an overall exposure of 11.3%. But within that, renewable energy constitutes about 4.8%. Non-renewable energy is about 4%, which are predominantly operational assets, and we have no exposure to SEBs. T&D, which is a sector doing reasonably well now is 1.6% of our total exposure, and roughly about 0.8% of our investment are in ‘AA’ and ‘AAA’-rated investments. There is a jump in your NPA and provisions this quarter.

But within that, renewable energy constitutes about 4.8%. Non-renewable energy is about 4%, which are predominantly operational assets, and we have no exposure to SEBs. T&D, which is a sector doing reasonably well now is 1.6% of our total exposure, and roughly about 0.8% of our investment are in ‘AA’ and ‘AAA’-rated investments. There is a jump in your NPA and provisions this quarter.

What is the reason behind it?
A one-time aberration has resulted in an increase in NPAs and the consequent provisions. So our Gross NPA stands at 1.52% and net NPAs are at 0.81%. It is largely the result of one borrower, which is about 0.69% of our total advances. The absolute number of this single borrower is `911.5 crore. The net exposure after provision of this borrower is `684 crore appoximately, which we expect to recover in the near term.